Economic conditions in 2008 spelled bad news for Americans. The housing sector was very much affected, experiencing erratic mortgage rates and a pronounced increase in foreclosures. However, there were those who were wise enough to take advantage of the situation.
In 2006, Americans were already investing in foreclosed homes. Yves and Max Dumont are examples of those who decided to buy a home on the brink of foreclosure. The brothers purchased a $42,500 two-family home in bad need for repair. The heating system, kitchen equipment, piping and flooring had to be renovated. Rehabilitation was estimated to cost $50,000, but even before the home was foreclosed, the home was sold for $260,000.
Distressed homes, which includes foreclosed homes and short sales, accounted for around 70 percent of multifamily homes sales and over 27 percent of single-family home sales in Rhode Island last year. The surge in rates caused the Rhode Island Association of Realtors to track the number of sales.
In December 24, a decrease in the inventory of unsold houses compared to 2007, taken as a good sign, was noted by the Realtors Association. Single-family homes logged in at 5,492 compared with 5870, multifamily homes were down 1,322 from 1,717 and condominium sales dropped 1,542 from 1,639.
Leonard Lardaro, University of Rhode Island economist says that the decrease in single-unit home construction permits was actually a fortunate since there was still an inventory unsold houses that needed to be taken cared of.
Lardaro predicts that 2009 will be a better year, but recession will continue at least until the third quarter of this year. He says that housing prices will continue to be unstable and unemployment would still be high. However, he cites that the federal government’s efforts to lower mortgage rates will finally pay off as borrowers may be able to refinance with rates as low as around 4 percent.
Still, it seems that Americans will still need to be even more resourceful about dealing with foreclosure in 2009.
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